Private debt and infrastructure set for increased allocations from LPs – Coller

• 44% of LPs plan to boost private debt investment in next 12 months: Coller
• 1,018 private debts funds are currently in market, seeking a total of $411.5bn
• 31% of LPs plan to increase alts allocations, with 9% planning to decrease

June 12 (Preqin News) - Almost half of LPs plan to increase their target allocations to both private debt and infrastructure over the coming year, according to a survey by secondaries investor Coller Capital.

In the Summer 2023 edition of its Global PE Barometer Report, Coller reported that 44% of respondents intend to raise their private debt allocation target, up from 37% who said they planned to increase their target in the Winter 2022/23 edition of the report. 

For infrastructure, 42% plan to increase their target allocation, compared with 33% six months earlier. 

Only 5% said they planned to reduce their allocation to infrastructure, while 11% said they intend to trim their allocations to private debt.

Private debt has grown increasingly popular with investors since the Global Financial Crisis, when record low interest rates prompted investors to seek higher yields in private markets. During the global pandemic the low-rate environment sustained the trend while more recently, floating rates provided some protection from inflation, further enhancing the asset class’s attractiveness. 

Meanwhile, infrastructure has burnished its appeal as some countries look to develop cleaner energy in the wake of the conflict in Ukraine, reshaping global supply chains, and the post-pandemic shift toward digital commerce. The massive infrastructure development plan championed by US President Joe Biden is also expected to help provide favorable investment opportunities. 

Preqin is tracking 1,018 private debt funds in market seeking a combined total of $411.5 bn. Direct lending senior debt funds, with 203 currently in market, are seeking the largest amount of capital with an aggregate target size of $128.7 bn. Meanwhile, there are 492 infrastructure funds in market, with an aggregate target size of $458.9 bn.

The Coller report found that, overall, 31% of LPs plan to increase their target allocations to alternatives in the next 12 months, with 9% indicating that they plan to reduce allocations. The report surveyed 110 investors in private equity funds based in North America, Europe, the Middle East and the Asia Pacific region between mid-February and the end of March.